Emerging markets hunger for smartphones, manufacturers oblige

Thanks of emerging markets, sales of smartphones in 2013 is expected to have a 32.7 percent gain from last year’s number.

The IDC is forecasting that 958.8 million units will ship this year compared to last year’s 722.5 million units.  Also, in the report, the research firm also predicts that smartphone shipment will surpass that of feature phones, which again, is thanks to rising demand in emerging markets.

Increased in demand for smartphone also correlates to drop in prices, as it is predicted that the average smartphone price will drop to $372 (USD) in 2013 from $407 in 2012, and by 2017 the price is expected to drop around  $309.

News such as these doesn’t come as a surprise to many of us, but for firms like Apple, which in the past have relied heavily on high profit margins, must scale down and produce products that are competitive in terms of both functionality and price.

Data gathered by the IDC suggests that more than half of all smartphone sales in 2013, 64.8 percent, are in emerging markets, that’s roughly a 20 percent increase from 2010.

Handset makers from all corners of the globe are finding ways to cut manufacturing costs and overhead to meet the demands of these hot markets.  With companies like Samsung leading the way, it is becoming harder for ‘premium’ brands like Apple to compete abroad.

While the news of cheaper smartphone seems like a gift from heaven for many consumers, there’s also a catch.  To make handsets cheaper, manufacturers must also use cheaper components, meaning no LTE, and perhaps bare minimum processing components—this, of course, is not taking into consideration the construction material used or their durability once the handsets hit the market.

Many emerging markets still don’t have the infrastructure necessary to support the latest mobile data technology, and handset makers are using this to their benefits.  The IDC thinks that 70.9 percent of all the smartphones shipped in 2013 will come with 3G, which greatly reduces the cost of manufacturing, and at the same time provide for ‘up-to-date’ experience for markets that are still a bit behind.

via digitimesimage: jana